According to World Economic Forum, Latvia is one of the Europe's entrepreneurial hotspots. Many entrepreneurs choose Latvia as a starting point to reach European market. Latvia is home for more than 30 fintech stratup companies from blockchain and alternative lending (crowdlending) segments, among them are Bitfury, Axioma, Mintos, Visainvest.

The reasons for that are clear – Latvia is European Union Member State that gives an advantage of free mobility of good and labour. Latvia itself offers multi- lingual and well educated labour force. In addition, the Quality of Life index is considered high with low cost of living, and not to be skipped – the location near the Baltic Sea coastline that stretches for 500km is nothing less than spectacular.
Latvia boasts the largest air transportation hum in the Baltics – Riga International Airport, that is located 20 min drive to the city centre. It is also ranked as the country with the 10th fastest internet worldwide, free wi-fi can be found almost everywhere in the centre of Riga. From business perspective Latvia offers 0% CIT rate for undistributed profit, low cost of business (many co-working spaces offered) and support for Start-Up companies.

Latvia has developed strong support for companies starting innovative businesses in all areas of activity without any restrictions. There are co-acceleration funds ALTUM, Startup Wise Guys, Commercialisation Reactor, venture funds and syndicates, e.g. LatBAN, and it is also possible to get a LIAA innovation voucher for up to 25,000 euros for business development. Business accelerators, investors, co-working spaces are concentrated in Riga and are easy to find and apply for support.

Benefits and allowances for Startups

Latvia introduced so called "Welcome Pack" for startups. Firstly, an important stimulus is the new startup law, including a special tax regime. The special tax regime includes 2 benefit options:

• 1) Flat Social Tax in the amount of 478 EUR, 0% PIT, contribution for pension fund in the amount of 10% on the difference between paid gross salary and two minimal gross salaries.
• 2) 45% Government Co-financing of the highly qualified and specialized employees salary and paid taxes. The startup pays the salary and taxes in full, and is then later reimbursed by the state.

There are 9 criteria to qualify for startup tax benefits, among them the most important is the received investment from qualified investor. However, it is possible to get tax benefits if no investment was attracted, if number of criteria are met.
The support is granted for 1 or 2 years depending on the investment amount, and can be extended for 5 years by submitting the application again.

Welcome Pack includes Stratup Visa, technically, temporary residence permit, that is offered to all non-EU startup founders (up to 5 founders per 1 startup). The Startup Visa is given for the period of maximum 3 years. After the law amendments, now it is not only easy to gain but also easy to retain, as now founders are not under the pressure to raise certain amount of venture capital funding within 12 months. Now company can provide a report demonstrating that startup is in continued process of product creation. The Starup Visa is spouse and children-friendly and it will allow you easy no-visa travel within EU.

Requirements to obtain Starup Visa

• Together with visa application the business plan of the planned activity must be submitted in order to evaluate its perspectives and qualification as a start-up company.
• Proof of financial means of subsistence at the rate of €8400 per adult and €1800 per child.
• Proof of criminal record (certificate of criminal records from a notified body with apostille).

Start-up eligibility criteria
When applying for a Latvian start-up visa, the new business idea must be assessed in terms of business scalability and growth of added value of the product (service) created. Documents describing the start-up must include:

• description of the main idea;
• forecast of the product's market potential;
• business strategy for the 3-year period;
• competitor analysis and advantages of the idea being promoted;
• characteristics of their competencies in the relevant field;
• a draft of the planned income and expenditure structure (simplified financial model).

In addition to the text material, it is recommended to submit a presentation (pitch-deck).
After receiving the start-up visa, the company must be registered in Latvia within 3 months.

As a non-EU citizen you have the right to own and manage a company in Latvia. However, becoming a resident is beneficial as it makes many processes smoother. The most common forms of business in Latvia are individual merchants, joint-stock companies, partnerships, and limited liability companies. However, two forms of business that perfectly suit startups are limited liability company (LLC, Latvian is abbreviation SIA), and a limited liability company with reduced equity.

You are more than welcome to ask questions on Start-up visa formation in Latvia, relocation of the team, company registration and taxation in Latvia. Contact us to start out and to scale up your business!


Email: info@forcetax.eu